How a big REDD project unravelled in Kelantan, Malaysia

In January 2017, the Kelantan state government in Malaysia signed a REDD deal with a company called Climate Protectors. The REDD project covers an area of 396,000 hectares, one-quarter of the state’s land area. Under the deal, Climate Protectors would run the project for 30 years, and receive 45% of the money from the sale of carbon credits.

The photograph above shows Tang Too Siah, CEO of Climate Protectors, shaking hands with Ahmad Yakob, the Chief Minister of Kelantan, after the signing on 9 January 2017.

During the signing ceremony, EcoBit’s CEO Tang Too Siah had the following words to say,

This ceremony is solemnly taking place on this glorious day, and to pave the way for trading carbon credits officially, and became the starting point in this trade for both Kelantan and Malaysia in general.

The agreement with the state government will provide Climate Protectors concession for a period of thirty years. Under this concession, there will not be any logging or deforestation in the area, including mining activities and any activity that will affect the process of forest recovery.

And here’s a slide of the banner hanging on the wall behind Tang Too Siah and Ahmad Yakob during the signing ceremony:

This is a REDD project, then, and the agreement was signed between the Kelantan state government and two companies: Climate Protectors Sdn Bhd and EcoBit.

Climate Protectors and EcoBit

Climate Protectors Sdn Bhd is registered in Kota Bharu, Kelantan. The company’s website gives an office address in Kuala Lumpur. The company’s website, climateprotector.org, was registered on 15 August 2016. It was registered anonymously.

On its website, the company claims to specialise in renewable and sustainable energy. But the company has no experience in developing energy projects. Or in running a REDD project. Or any other forest conservation project.

On 5 July 2017, The Malaysian Insightreported that it had visited the address given on Climate Protectors’ website: B-5 , Plaza Mont Kiara, Mont Kiara, 50480 Kuala Lumpur, Malaysia. They found no trace of Climate Protectors’ office:

EcoBit Asia Sdn Bhd is registered in Petaling Jaya, Selangor. The company’s website, ecobit.io, was registered on 28 July 2017, by “Ecobit Co. Ltd”. The address given is 50 Raffles Place, Singapore, which is the address of the Singapore Land Tower – the same address given on the company’s website. But EcoBit gives no floor number or office suite, which is unusual for a company in a 48 storey office building.

In a discussion about EcoBit’s initial coin offering (more about that below, for more details), EcoBit states that “EcoBit owns 60% of CP [Climate Protectors].”

EcoBit Phase I: Kelantan REDD project

Ecobit claims to be the world’s “first-ever green blockchain project”. Up until recently, the company’s website stated that EcoBit’s project would be in three phases. In the last few days, EcoBit has been busy deleting all reference to Phase I from its website.

Phase I was the Kelantan REDD project. Here’s how EcoBit announced Phase I on its website:

History was made in the state of Kelantan and Malaysia on the 10th [sic] of January 2017 when the Malaysian state of Kelantan awarded over a million acres of carbon-rich, high conservation value tropical forest which is 5.6 times the size of Singapore to Climate Protectors Sdn Bhd which uses Ecobit technology.

EcoBit claimed that the forest “has an emissions avoidance capacity of over 800 million tonnes”, although it provides no information about how it came up with this figure. EcoBit stated on its website that during the 30 year project,

EcoBit is sanctioned to generate income through carbon credit to finance innovative green & sustainable project which will be implemented in phases. The entire area under the concession will be under the care of Climate Protectors and a joint task force will be formed to monitor the area, including the deployment of new technology like drones and thermal scanning to protect and defend the forest from illegal logging.

Climate Protectors will be implementing the latest technology called EcoBit with the REDD+ programme. It is a blockchain technology where data is structured in a way that makes it possible to create a digital ledger of transactions, which cannot be altered but totally transparent, thus enabling it to track and monitor the carbon credit.

On 10 January 2017, The Starreported Chief Minister Ahmad Yakob as saying that Climate Protectors would contribute about US$2.2 million within two years to the state. Climate Protectors would first audit how many carbon credits could be generated from the project area, then trade the credits on “the international carbon credit stock exchange”.

While there is no such thing as “the international carbon credit stock exchange”, EcoBit later explained in a Bitcoin discussion forum that it was planning to sell voluntary carbon credits on the Carbon Trade Exchange (CTX).

Kelantan REDD project doesn’t meet the conditions of the UNFCCC

On 17 February 2017, the Berita Daily reported Wan Junaidi Tuanku Jaafar, Malaysia’s Natural Resources and Environment Minister, as saying that the agreement signed between Kelantan and Climate Protectors doesn’t meet the conditions of the UNFCCC. In a statement, Wan Junaidi said,

“The mechanism is based on financing principle for the amount of greenhouse gas emission reduced and does not involve market mechanism.”

“The discussion has been going on for several years. As such, it is crucial for the state government to comply with the conditions. I hope that REDD initiatives are not affected by the unethical activities of some unscrupulous individuals.”

Wan Junaidi said he would explain to the Kelantan government that the agreement with Climate Protectors would not be counted as a contribution to Malaysia’s reduction of carbon emissions.

Not part of UN-REDD

On its website, EcoBit claimed that the Kelantan REDD project was somehow part of the UN-REDD programme:

This concession is under the United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation, UN-REDD or REDD+ initiative, this is the first of its kind for Kelantan and Malaysia and will be the world’s largest REDD+ forest preservation project, in terms of total verified emissions to date.

On its webpage about its activities in Malaysia, UN-REDD makes no mention of the Kelantan REDD project. And on 5 July 2017, UNDP communications analyst Ahmad Hafiz Osman toldThe Malaysian Insight that,

“UNDP in Malaysia is not involved and does not have any partnerships with Ecobit. There are no UN-REDD projects or UNFCCC approved REDD+ projects in Malaysia.

“As of now, we have not been notified of any UN agencies who have partnered with Ecobit. Hence, the use of the UN logo and its agencies is not permitted.”

The UN logos that EcoBit used on its website were removed earlier this week.

EcoBit’s Initial Coin Offering

On 9 April 2017, EcoBit announced its new cryptocurrency on a Bitcoin discussion forum. EcoBit was launching an “Initial Coin Offering”. An ICO is basically a fundraising mechanism, where investors can buy a future cryptocurrecy (EcoBit) using an existing cryptocurrency (such as Bitcoin, Dogecoin, or Ethereum).

The Economist describes the coins bought in an ICO as “digital coupons, tokens” issued on a blockchain.

ICOs are completely unregulated. A recent article on Tech Crunch explaining how ICOs work, notes that, “In the world of ICOs, fraud is never hard to find.”

To summarise: EcoBit, a company that may have an office somewhere in a 48 storey tower block in Singapore, is raising cryptocurrency by launching a future cryptocurrency. The cryptocurrency raised will be used to set up a future REDD project, that may at some point in the future generate carbon credits. What could possibly go wrong?

To make matters worse, the REDD project has been disowned by Malaysia’s Natural Resources and Environment Minister.

Nevertheless, on 13 June 2017, Cointelegraph reported that two days before the ICO closed, EcoBit had raised “around $5 mln in Bitcoin, Ethereum and NEM contributions”. In the article, Tang is quoted as saying that,

“In phase one, we secured one mln acres of tropical rainforest with Kelantan state government in Malaysia. It is the largest ever carbon credit project in Malaysia.”

“As we have strong connections with the government, for most of our project we will work closely with them.

“We are doing a UN-REDD led project, which complies with all their protocol and standards. The assessment will be done according to their standards, verified by independent auditors, certified by them. We do not consider them as a partner but as compliance to their standards and certifications.”

Bank Negara warns against Climate Protectors and EcoBit

On 23 June 2017, Bank Negara Malaysia (the country’s Central Bank) put out a warning that Climate Protectors and Ecobit, “are neither authorised nor approved under the relevant laws and regulations administered by BNM.”

Three days after the warning, Chief Minister Ahmad Yakob said that the carbon trading project was official.

On 3 July 2017, Husam Musa, vice president of the opposition Amanah party, referred to the Bank Negara warning about the two companies in a statement. Husam Musa’s statement was reported by Free Malaysia Today under the headline, “Amanah: Kelantan approved 1 million acres of forest to ‘illegal’ company”. Husam asked whether the Chief Minister was taking the Bank Negara warning seriously.

Free Malaysia Today notes that on its website, EcoBit was touting “30 years profit”. This statement has now been removed from EcoBit’s website, but I found a copy on Google’s cache:

30 YEARS PROFIT

The concession of the rainforest will span for 30 years and is to be used to preserve the rainforest and to reduce polluted gases in the air to reduce carbon footprints. Through eco-capital, EcoBit is sanctioned to generate income through carbon credit to finance innovative green & sustainable project which will be implemented in phases. This is where your contribution and investment comes in, with the help of your investment, not only will you be gaining returns, but you will also be contributing greatly in the reduction of carbon credit globally.

On its website, Climate Protectors quotes Chief Minister Ahmad Yakob as saying that “It will take around 12 to 24 months to conduct a scientific calculation, valuation and verification report by certified independent scientists to determine the carbon stocks in the designated state Forest.”

Husam points out the contradiction that studies will need 12 to 24 months, but EcoBit was selling crypto currency based on the REDD project three months after the agreement was signed with the Kelantan state government.

Asking whether the state government agreed to the company collecting money from the public illegally, Husam warned that the public could fall victim to a scam.

“Will the Kelantan government also become a victim or is it an abettor?”

He also asked whether the state government would agree to revoke the agreement with his expose and warn the public against being cheated.

“What is crucial is that the Kelantan forest reserve asset must not be pawned off, the people must not suffer losses and the interest of the state is protected,” he said.

Legal threats

On 6 July 2017, The Starreported that the Kelantan government was urging investors in the state’s carbon trading project to file reports with the police.

On the same day, Tang Too Siah announced that his company was seeking legal advice:

“Climate Protectors Sdn Bhd and I are currently seeking legal advice from our solicitors with regards to our legal rights following the statements published during a press conference as well as all the republication in newspapers or social media.

“We reserve our right to take legal action against those who are responsible for publishing or circulating such statements.”

Husam Muta, Amanah’s vice president, responded by welcoming legal action. He said, that “It is my duty as an Adun [member of the legislative assembly] to protect the interest of the state and my people. Your threat to sue will not change my duties and responsibilities to speak up.”

TS Tang, DS Tang, and Tang Too Siah

Husum also questioned Tang Too Siah’s background:

“If the TS Tang who is involved with BTC Panda is the same as Mr Tang Too Siah from Climate Protector and EcoBit, then I believe my warning to the Kelantan state government is important and urgent.”

BTC Panda was a Bitcoin investment scheme that offered 1% return a day. From the marketing plan, it looks an awful lot like a pyramid scheme.

In 2016, payments from BTC Panda stopped. There are variouswebsites that report BTC Panda as a scam.

In 2016, TS Tang gave a presentation at a BTC Panda event in the Philippines. During the presentation, he describes his career since 2010 in Bitcoin mining:

Tang Too Siah is also director of a company called Axioms.biz, a company that specialises in cryptocurrency mining. The website was registered by TS Tang, who lives in Petaling Jaya.

REDDisms:

“If I get to the presidency not a single square centimetre will be demarcated as indigenous land. The most resource-rich territory in the world is currently protected as indigenous land. We need to change that.”